Oil prices struggle on doubts OPEC can rein in oversupply

Oil prices dropped to six-week lows on Thursday, under pressure from high global inventories and doubts about OPEC's ability to implement agreed production cuts.

While futures added 0.5% in NY, they're down 2.5% for the week, a fourth straight decline.

Brent crude oil and the U.S. light crude dropped by 30 cents to $46.70 a barrel and $44.43 per barrel respectively to their almost six-month lows, reported Reuters. Crude output climbed, while nationwide crude inventories fell less than predicted.

Oil has declined nearly 8 percent this month amid speculation that rising U.S. supplies will offset output curbs by the Organization of Petroleum Exporting Countries and its allies, including Russian Federation.

The bearish inventory report added to the current negative sentiment on oil, after the International Energy Agency said Wednesday that non-Opec output was set to increase over the near term.

The EIA reports that the price of oil over the course of quarter three may lead to possible increases in price over the next few months of this year. This has happened despite of OPEC-led production cuts to support the crude market. Demand hasn't been strong either, so "it's hard to come up with a real bullish scenario". On the New York Mercantile Exchange, West Texas Intermediate futures were down 1.08% at $45.96 a barrel. Total volume traded was in line with the 100-day average. The contract lost $0.27 to $44.46 on Thursday, the lowest since November 14.

Brent for August settlement rose 44 cents to $47.36 a barrel on the London-based ICE Futures Europe exchange.

Crude inventories USOILC=ECI fell 1.7 million barrels in the week to June 9, compared with analysts' expectations for a decrease of 2.7 million barrels, as imports USOICI=ECI fell 481,000 barrels per day. Brent traded at a premium of $2.35 to August WTI. A stronger U.S. currency reduces the appeal of dollar-denominated raw materials as an investment.

In the United States, which is not participating in any deal to hold back production, oil output C-OUT-T-EIA has risen more than 10 percent over the past year to 9.3 million bpd, and the Energy Information Administration (EIA) expects that figure to rise above 10 million bpd in 2018. But adherence to the cuts is under scrutiny and the producer group said this week its output rose by 336,000 bpd in May to 32.14 million bpd.

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